But Iraq has issued a statement ruling out any co-operation with the inspection programme in its current form.

The announcement came as American Defence Secretary William Cohen continued discussions with Washington's allies in the Gulf about the latest tensions.

Nuclear monitors remain, but their activities are restricted

The Iraqis have refused to allow either the UN special commission on disarming Iraq (Unscom) or the International Atomic Energy Agency to carry out spot inspections in the country since August.

On Saturday Iraq halted all remaining co-operation after the Security Council decided to review its compliance with UN resolutions, but without any guarantee that this would lead to sanctions being lifted.

The inspectors are trying to establish whether Baghdad has a stockpile of nuclear, chemical and biological weapons.

The draft resolution, which diplomats expect to be adopted on Thursday, condemns Iraq's decision as a "flagrant violation" of UN resolutions.

It notes past council resolutions that threatened the "severest consequences" if Iraq failed to allow inspectors unfettered access to suspected weapons sites.

But the document does not authorise any military action as the United States and Britain have threatened.

The draft also addresses Iraqi concerns about the council's willingness to consider lifting the oil embargo once UN inspectors have declared the country is disarmed.

Deputy US Ambassador Peter Burleigh called it "a good, strong resolution," and ''a very important development''.

'Most serious confrontation since Gulf War'

The UN's chief weapons inspector, Richard Butler, says the situation appears to be the most serious confrontation between Iraq and the UN since the end of the Gulf War.

Iraq demands the sacking of Unscom chief Richard Butler

The Deputy Prime Minister, Tariq Aziz, has said Iraq will settle for nothing less than a removal of the sanctions that have strangled its economy, and the sacking of Mr Butler.

"If the Security Council shows seriousness about lifting sanctions there will be a resumption of co-operation," he said.

However, reports from Baghdad say technical staff from Unscom were allowed onto suspected weapons sites on Monday to maintain monitoring equipment.

Saudi monarch promises to support US

Meanwhile, Mr Cohen has been meeting officials in Qatar on a hastily-arranged Gulf tour to discuss the crisis over weapons inspections.

Iraqi President Saddam Hussein: Lifting sanctions a priority

The BBC Gulf correspondent says there is mounting speculation over whether American bases in the region will be used in the event of any military action against Iraq if it continues to refuse to co-operate.

After talks in Saudi Arabia, a Pentagon spokesman, Kenneth Bacon, said the Saudi monarch, King Fahd, had promised to continue to support "US efforts to preserve regional security."

The US has 23,000 servicemen and women in the Gulf region as well as over 200 navy and airforce war planes.

In September, Mr Cohen said the number of US troops in the Gulf could be doubled within four days.